Friday, August 21, 2015

Say it ain't so: @AmericanAir to stop flying to Tel Aviv

By 5:00 am on Friday, I had two emails asking me if it was really true that American Airlines is going to stop flying its Tel Aviv - Philadelphia route. As a Platinum frequent flier with 500,000 miles on American, I have a small stake in that decision. Unfortunately, the answer appears to be yes.

American Airlines announced Friday that it will close its Tel Aviv-Philadelphia route in 2016.

The decision was made based on financial considerations, the airline said.

The
last direct flight from Philadelphia to Tel Aviv will be on January 4,
2016. The final Tel Aviv to Philadelphia flight will take place the next
day.

Dormant complications between former Trans World Airlines employees
and American Airlines are rekindling after American merged with US
Airways, which currently operates flights from the United States to
Israel.

The tension between the former workers and the airline began when
American acquired TWA’s assets in 2001 and discontinued service to
Israel. According to newspaper reports at the time, the move left over
75 people without jobs and pension benefits. The situation spurred a
nine-year legal battle between the former TWA employees and American,
which was settled four years ago in court.

TWA operated non-stop flights from the U.S. to Israel for over a half a century before it was forced into bankruptcy.

That article was from 2014, which means that the settlement was in 2010. One can only wonder why American settled (they rejected the TWA contracts in bankruptcy court, which is completely legal in the US). They could have ignored the former TWA employees... except that they wanted to operate in Israel, which would not regard the American bankruptcy court ruling as the last word. That must mean that the market here is lucrative. And it is. We have a huge tourism industry for a country this size, and British and Lufthansa - the two largest European carriers here - keep adding flights. United and Delta have never complained about having problems turning a profit here. If American can't make it flying here out of Philadelphia, they could surely make it out of Miami or Chicago or San Francisco, all of which have huge traffic to Israel (the latter being largely high tech types and not necessarily tourists) who don't have direct flights here. So what gives? Well, here's a hint:

However American is saying that the reason for the cancellation is that the route has always been a money-loser.

That’s rather curious as USAirways’ president Scott Kirby has called
the route among the most lucrative in their system. Newark-Tel Aviv was
also publicly called the most profitable in Continental’s system in the
past.

Profit can easily be manipulated by
attributing various costs to the flight. And no doubt the cost of paying
back the ex-TWA workers is a factor here.

Or perhaps American doesn’t want to pay off TWAs debts to avoid
setting a precedent of paying off TWAs debts when they only purchased
TWAs assets in the first place?

At any rate, American is stating that they will not be serving Tel
Aviv from other hubs. Both their JFK and Miami routes are natural fits
for service to Tel Aviv, so if American’s issues are ever resolved I’d
expect routes from those hubs rather than Philadelphia.

American will be contacting customers booked to fly
the Philadelphia-Tel Aviv route next year with options for alternate
arrangements or a refund.

So it's the Israeli employees after all? I've seen that pension liability estimated at $15-20 million, which is a lot of money for 75 employees - about half a million dollars each. There's no Pension Benefit Guaranty Corporation here like in the US. On the other hand, one has to wonder how a bunch of ticket agents (hint: There were no pilots based here) built pensions that size.

By the way, one of the upshots of that episode is that when you check in at the airport with any airline other than El Al, the person checking you in is almost always an airport employee and not an employee of the foreign airline. How do I know that? Because I've had enough conversations with British Airways and American (USAir) agents in the last two years. When they tell me they've never been to London or the US, it's pretty obvious they're not airline employees (the biggest perk of being an airline employee is free airfare).

Congressman Chaka Fattah (PA-02),
released a statement after the announcement by American Airlines today
that they will stop service on their nonstop route between Philadelphia and Tel Aviv effective January 4:

"I am strongly opposed to the decision announced today by American
Airlines to cancel this flight route. It is a critically important
route, both for the constituents in my district who travel between Philadelphia and Tel Aviv, and also for the growing business relationship between our city and Israel.
The effects of this decision will not only hurt tourism between our two
countries, it will have a negative impact on our economies. The ease
and accessibility offered by this flight had significant long-term
potential to stimulate growth and communication.

"I hope to work with American Airlines to see if there is an
alternative solution to cancelling the route and will seek a meeting
with the appropriate officials in the coming weeks to discuss options to
keep this flight operating."

Okay, so it's kind of funny to see Chaka Fattah making such a fuss about this. His last appearance on this blog was here.

I'm sure a few of you are going to wonder what I'm going to do with all that mileage. I'll probably just keep right on flying, but it's going to be harder to accumulate and use the mileage. Here's why:

1. There was no mileage for American frequent fliers on USAir until quite recently. Until March of this year, I had never flown the USAir flight. I've flown it once to Philadelphia and twice to Tel Aviv since March. Where were all my other trips? (I'm going for the 5th time this year later this month). Mostly British, at least until London, but in the last two years I have also flown out of Israel on Iberia, FinnAir and Air Berlin.

2. Nearly all of El Al's European flights now have American code share numbers. I can accumulate mileage that way... but I can only do it on the way back to Israel if I can limit myself to one suitcase.... (Fat chance).

3. Other than American, the only airlines in the OneWorld group that come in here that give full mileage credit for any leg into or out of Israel are British and FinnAir. Iberia gives you 80% in coach on Madrid-Tel Aviv flights, and Air Berlin gives as little as 25% depending on how much you pay for your ticket. By the way, I flew FinnAir Tel Aviv - Helsinki - London either last winter or the winter before and they were a pleasure.

4. It would take me six months or more to reach the point where I can choose my own seats in advance on any other airline group. Six months of sitting with my knees against the seat in front of me (and I'm only 5'8")....

5. British and Iberia both charge huge fees for 'free' travel - $350 per leg the last time I checked. But as an elite flyer I may be exempt from that which will give me opportunities to use my mileage.

6. One thing I will NOT do is switch to El Al (yes, I have a number, but I rarely use it). I'm not flying an airline that takes away my mileage every 18 months whether or not I fly. I'd rather accumulate my miles and use them for big family trips and the like.

1 Comments:

great blog.One issue with American miles: they do have an expiration date, I believe (like El Al).BUT... last yr, during Cast Lead, my wife was due to fly back home to the US on USAIR, and they stopped flights due to Hamas rocketing. She was switched to El Al, and resolved to ONLY fly El Al in the future. She had a wonderful flight, and claims that El Al treated the passengers better than USAir.

Links to this post:

About Me

I am an Orthodox Jew - some would even call me 'ultra-Orthodox.' Born in Boston, I was a corporate and securities attorney in New York City for seven years before making aliya to Israel in 1991 (I don't look it but I really am that old :-). I have been happily married to the same woman for thirty-five years, and we have eight children (bli ayin hara) ranging in age from 13 to 33 years and nine grandchildren. Four of our children are married! Before I started blogging I was a heavy contributor on a number of email lists and ran an email list called the Matzav from 2000-2004. You can contact me at: IsraelMatzav at gmail dot com